Compensation Disclosure

Time for Brokers to Come Clean

The world of employee benefits is changing—and so is the expectation around who works for whom.

​

For decades, many brokers have operated in a conflicted business model—claiming to serve employers while being paid undisclosed bonuses and incentives by carriers, PBMs, and other vendors.

​

Many carriers offer brokers extravagant “bucket list” rewards—like trips to the Masters golf tournament or all-expense-paid vacations to Paris.

These aren’t isolated incidents.

​

Relentless reformer Marshall Allen wrote Behind the Scenes, Health Insurers Use Cash and Gifts to Sway Which Benefits Employers Choose while he was with ProPublica,

​

The report details how brokers were being rewarded with luxury suites at the Super Bowl, trips to Maui and Cabo, and tens of thousands in bonuses—simply for funneling business to certain carriers.

​

I know a few brokers who have taken trips like these. I used to naively think they were being rewarded for great service to clients. But they’re not. They are rewarded for pushing the most profitable carrier products. These hidden incentives hurt plan participants and expose employers to serious fiduciary risks.

​

And the kicker? The costs don’t come out of the carrier’s pocket—they come from the employer’s health plan budget.

​

But things are changing. Fiduciaries are waking up—and demanding better.

The Shift: From Broker to Advisor

We believe the future belongs to unconflicted, validated fiduciary advisors who are paid directly by the client and bring independent, transparent insights to every decision.

​

These advisors:

• Put plan and participant interests first
• Help design high-performing, high-value plans
• Understand the local provider ecosystem
• Guide contracting with best-in-class vendors

​

Groups like Health Rosetta are leading this transformation—pioneering a new model for benefits advising. They’ve built a national network of independent advisors committed to fiduciary principles and employer-first strategies.

​

One of their impactful contributions is the development of standardized, employer-friendly contract templates—similar to what the American Institute of Architects (AIA) did for building projects. These model contracts simplify the procurement process, reduce legal risk, and help employers push back against one-sided vendor terms. With trusted advisors using common documents and benchmarks, employers can make better decisions—faster, cheaper, and with greater confidence.

​

Meanwhile, the Validation Institute is building something bigger than a credential—they’re cultivating a trusted ecosystem. Their new Fiduciary Advisor Validation Program goes beyond a simple endorsement. It rigorously evaluates whether advisors uphold fiduciary standards of transparency, accountability, and client-first service. And it’s not just for brokers. PBMs and other solution providers can also earn validation—creating a growing, interlocking network of trusted partners.

​

For plan sponsors, this means fewer unknowns, lower risk, and a stronger foundation for procurement decisions. It’s the infrastructure needed to build a more transparent and trustworthy health benefits marketplace.

Brokers vs Advisors

What’s in a name? A lot, at least when it comes to brokers and advisors. It’s all in how they’re paid and where their incentives lie. Fundamentally, advisors work for employers whereas brokers work for insurance carriers and other vendors.

​

Here’s a comparison between traditional brokers and fiduciary-aligned advisors:

​

These misaligned and often hidden incentives aren’t just unethical—they’re dangerous. They drive plan design and vendor selection that prioritizes profits over people.

​

For employers, that’s not just bad business—it’s a fiduciary liability.

How Broker Compensation Disclosure Works

Starting December 27, 2021, under the Consolidated Appropriations Act (CAA), any broker or consultant expecting to receive $1,000+ in compensation must disclose it in writing to the plan fiduciary.

​

✅ What Fiduciaries Must Know:

​

1. Broker Must Disclose Compensation in Advance

• Direct compensation: from the plan
• Indirect compensation: from vendors (carriers, TPAs, PBMs, etc.)
• How they’re paid: commissions, bonuses, incentives
• What they’re doing: services provided for that compensation

​

🚩 Red Flag: If your broker hasn’t already disclosed, you are already out of compliance.

​

2. Plan Fiduciary Must Review the Disclosure

• Review: don’t just accept what’s submitted
• Question: seek completeness and clarity
• Evaluate: identify potential conflicts of interest

​

3. What If Broker Says “Compensation TBD”

• Demand clarity: who’s paying and why
• Ask for estimates: base projections on prior years
• Request formulas: understand bonuses and incentives

​

4. What If They Don’t Disclose?

• Request: disclosure in writing
• Response: give them 90 days to comply
• Report: notify DOL if they don’t comply

​

5. Best Practice: disclosure is key to compliance

• Mandatory: don’t let brokers off the hook
• Full: nothing less than complete and clear response
• Incentives: mitigate misalignment with your interests
• Conflicts: avoid prohibited transactions
• Records: document and retain review findings

​

Full disclosure is an important step in paving the way for improved compliance and reducing unreasonable expenses.

What You Can Do Next

✅ If you’re an employer

• Require your broker to provide written disclosure
• Join Health Rosetta to access advisor best practices
• Compare broker to standards of a fiduciary advisor
• Evaluate advisors validated by Validation Institute

​

✅ If you’re a broker / advisor

• Shift your business model from conflicted to aligned
• Join a community of trusted advisers like Health Rosetta
• Get validated by the Validation Institute

​

📣 Let’s build a future where transparency, trust, and fiduciary duty go hand in hand.

​

💸 SPECIAL OFFER: Subscribers to this newsletter receive 10% off any Validation Institute service. Use code FIDUCIARY10 at checkout.

​

📬 Feel free to forward this offer to your broker, PBM, or other vendors. Don’t hesitate to tell them you will favor validated vendors going forward. Strong compliance and better benefits begin with validation.

​

Don’t be a bystander. Change the status quo and reap the benefits of The Health Plan Compliance Advantage.
​